Unleashing Growth: Bundestag Approves "Economic Boost" Package with Billions in Tax Relief for Businesses
German parliament, Bundestag, authorizes 'Growth Stimulator'
🔗 Facebook 🔗 Twitter 🔗 Whatsapp 🔗 E-Mail 🔗 Print 🔗 Copy Link
The Bundestag has given the green light to the "Economic Boost" package, a fiscal measure implemented by the ruling coalition of CDU/CSU and SPD. The bill passed on Thursday with the votes of the governing factions, while the Greens, Left, and AfD abstained or voted against it.
This package offers large-scale incentives to industries, with significant focus on tax relief for companies. Key provisions include accelerated depreciation measures, the expansion of the research allowance, and a gradual reduction in the corporate tax rate.
Breaking Down the "Economic Boost" Package
Accelerated Depreciation Measures:
Businesses can now enjoy accelerated depreciation benefits for assets such as machinery, equipment, and vehicles, deducting 30% of the acquisition value each year between 2025 and 2027. From 2028, the depreciation rate will decrease gradually. Notably, electric vehicles are eligible for a 75% first-year depreciation, encouraging green technology adoption within the automotive sector.
Research Allowance Expansion:
The ceiling for the research allowance will increase from €10 million to €12 million from 2026 to 2030. Simplified procedures and flat-rate deductions aim to reduce bureaucracy and further boost investment in research and development.
Corporate Tax Rate Reduction:
The corporate tax rate is scheduled for a ten-year reduction, starting in 2025 and ending in 2030. The rate will drop by one percentage point per year, ultimately reaching 10%. This reduction, combined with trade tax and solidarity surcharges, is expected to lower the total tax burden to below 25% by 2032, making Germany a more attractive destination for businesses.
The Bottom Line
The "Economic Boost" package totals approximately €46 billion in tax cuts, with the financial burden shared by the federal, state, and municipal governments. The package is designed to stimulate growth-generating investments, secure jobs, and create sustained economic growth, while providing companies with greater planning certainty.
Manufacturing and automotive sectors, notably electric vehicle producers, are expected to see significant benefits, potentially accelerating industrial modernization and green technology adoption.
[1] German Federal Government Website - https://www.bundesregierung.de/[2] German Federal Ministry of Finance Website - https://www.bundesfinanzministerium.de/[3] Statista - https://www.statista.com/
The Commission has also been asked to submit a proposal for a directive on the finance sector, considering the recent economic boost package passed by the Bundestag that focused on tax relief for businesses in the context of general-news politics. This potential directive may address issues related to business, such as the gradual reduction in the corporate tax rate aimed at making Germany a more attractive destination for companies.
